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Management: Definitions
Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aim(s) viz. to create a surplus(s). .
Weihrich & Koontz
Management is not an absolute; rather it is socially and culturally determined. Across all cultures and in all societies, people coming together to perform certain collective acts encounter common problems having to do with establishing direction, coordination and motivation. Culture affects how these problems are perceived and resolved. The
Art of Japanese Management by R. Pascale & A. Athos . vikramthadeshvar@hotmail.com
Collective, cohesive and consistent human effort towards accomplishing a common objective.
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Political Economic
Regulatory
Societal
Organization
Globalization Technological
Fredrick Taylors path-breaking scientific approach Henri Fayols classical definition of functions, now modified to:
Plan -- Organize -- Lead(Command&Coordinate) -- Control Interpersonal + Informational + Decisional Technical / Human / Conceptual
Leadership: The ability to influence a group towards achievement of goals. Motivation: The willingness to exert high level of effort towards goals Communication:The transference and understanding of vikramthadeshvar@hotmail.com meaning
Description
symbolic head; required to show face in social & legal conditions. Motivating & directing subordinates Networking outside for information & favours
Examples
Ceremonial, Civic etc. project plan Industry group meets
nerve centre and interpretator networking within the organization Transmit intent to outsiders; expert Opportunity finding& reacting Handling unexpected disturbance Initiating/approving changes vikramthadeshvar@hotmail.com Getting best deal for Organization
Technical Skills:
Application of specialized knowledge or expertise acquired though formal training & its use.
Skills Needed
Board Exec.
Human Skills:
Ability to work with people, understand and motivate groups & individuals.
Conceptual Skills:
Mental ability to recognize, analyze, diagnose and think through complex situations.
Mgr.
Supr.
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Principles of Management 2
Management: A Systems Approach
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input
Transformation process
output
System Boundary
Organization as a System receives Input, transforms it through a Process for Output and Operates in an Environment (economic, regulatory and other forces) vikramthadeshvar@hotmail.com
Problems
Sub-System 1
Sub-System 2
Sub-System 3
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Inputs are converted to Outputs. Outputs of one subsystem become inputs to another subsystem. Outputs must adhere to standards to be useful or acceptable to the next subsystem.
System Environment
Environment consists of people, organizations
and other systems that supply data to or that receive data from the system Managers at different levels perceive Environment vikramthadeshvar@hotmail.com differently
Man: human resources, both inside and connected with an organization; Materials: goods (hard & software, processed or semifinished) and services required to create the sellable end product; Machines: technology and expertise deployed towards the transformation process; Methods: systems, procedures and processes seamlessly put together for the transformation; Measurement: score-keeping and in-process monitoring continuously with due feedback to keep on-course on time.
Money is required for generating all theses Ms managers need to acquire, deploy, generate and vikramthadeshvar@hotmail.com distribute money as a primary need for business!
Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it than from other ventures; Society: includes the State, provincial and local governments for the improvement of quality of life of its citizens;
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Suppliers: continuity of their enterprise depends on the success of the customer enterprise; Customers: require the goods and services provided by the enterprise, better than than those from its competitors. The enterprise is, in turn, a supplier to its customers; Employees: livelihood depends on the progress and success of the employing enterprise;
There is a freedom of choice (for association) between each of these stake-holders and the enterprise in the longer term:
But they sink or swim together in the shorter term Length of term definition varies with individuals! vikramthadeshvar@hotmail.com
to accomplish certain pre-determined, (as derived from stakeholder needs) goals or objectives
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Organizing
Controlling
(Goal Oriented)
Inputs
(External To Orgnzn.)
Outputs
Planning
Staffing
Leading
Principles of Management 3
Management Process First Step: Planning
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Planning
Planning involves selecting objectives or goals and the course of actions to achieve them:
Provides the bridge to take us from where we are to where we want to go; Is a rational approach to achieving preselected objectives - based on innovation, knowledge and purpose; Decision making in choosing the best from alternative courses of action and is integral to planning;
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Plans
Types of Plans
Mission / Purpose
Objectives/ Goals
Strategies
Determination of the long term objectives and adoption of a course of action Gives a frame work for linked action-plans, communicated systematically to guide thinking and actions.
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Policies
Plans that are general directional statements (or understandings) that guide/help in decision making:
Repeat decisions taken reflexively; Delegation of tasks without loss of control.
Some discretion is permissible depending on circumstances thus encouraging initiative within limits and situational adjustments; Issues with Policy
Seldom documented in writing Subject to interpretations
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Procedures
Plans that are chronological sequences of required actions: task-oriented in nature; Cuts across department boundaries (subsystems) in an organization: e.g. customer complaint handling procedure; Procedures and policies are inter related: e.g. authorization for paid leave
Policy governs quota, responsible authority etc. Procedure governs application, grant and record-keeping.
Rules
Programs
Action plans (mainly non-routine or for changed activities) including, task assignments, steps to be taken, resources to be deployed etc. to achieve a (new/renewed) goal;
Primary program may require supporting programs, spreading across the enterprise; Perfect coordination between supporting & primary programs essential to avoid delays, unnecessary costs and expected roll-out.
Programs are a complex of (sub)goals, policies, rules and other elements necessary for the course of action e.g. obtaining ISO certification. vikramthadeshvar@hotmail.com
Budgets
A statement of expected results expressed in Numerical terms e.g. financial operating budget = profit plan; Budgets enforce precision in thinking:
Making a budget is planning by itself; Encourages innovation a different way to work
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Steps in Planning
Being aware of challenges
Market, Customers wants, Competition, Own strengths & weakness
Planning premises
Identifying alternatives
Comparing & choosing an alternative e.g., Sales budget e.g., plan to buy Decision Operational Expense budget, Equipment, recruit & train making vikramthadeshvar@hotmail.com Capital expenditure budget Employees, develop product etc
Planning Period:
Short range plans e.g. material procurement plan in a factory Long range plans e.g. product development plan, plant/production facility installation; Urgent drives out the Important mismatch between short & long term plans!
Planning horizon must allow for actions to run their course requiring commitments:
Thus decisions today are key to good plans; Long-term plans reap benefits of good shortterm plans.
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Steps in Planning
Being aware of Opportunity Considering, Market, Competition, Customers wants, Own strengths &weakness
Objective = Important end towards which activities are directed; therefore needs verification at the end of the plan period.
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Sales Manager A
Sales Manager B
Objectives set end results they need to be supported by a hierarchy of sub-objectives, duly networked through the organization to avoid vikramthadeshvar@hotmail.com discord and wasted effort.
Managers must ensure that the components of the network fit each other; Departments/divisions can be blind-sided.
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While setting Objectives, ideally, Top Management should get information / buy-in from lower levels to set realistic goals for a good result. vikramthadeshvar@hotmail.com
Are areas in which performance is essential for the success of an enterprise Examples of generic KRAs:
Peter Drucker recommends: Market standing, innovation, productivity, physical & financial resource, profitability, managerial performance & development, worker performance & attitude and public responsibility.
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A comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of organizations and individual objectives:
Set-out by Peter Drucker in 1954; Integrated to personal performance appraisal by Douglas McGregor in 1957; Has formed the basis for many theories on motivation; Has been criticized for introducing a short-term focus and undesirable behaviour; Currently viewed as a way of managing not a specific vikramthadeshvar@hotmail.com tool.
Weaknesses of MBO
Emphasis on:
short term at the expense of long term Results over Process Individual over collective effort
Failure to grasp and deploy the concept of seamless cascade Difficulty in setting agreed, harmonized goals
Danger of inflexibility vikramthadeshvar@hotmail.com
Identifying alternatives
objectives; the adoption of courses of action and allocation of resources required to achieve the aims.
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Management Orientation
Enterprise Profile
External Opportunity & Threat Key success factors & Alternative Strategies Internal Strengths & Weakness Strategic choice
Planning Premises
Porters Five Forces : an Model for analysis of the Externals environment. vikramthadeshvar@hotmail.com
Estimate of future demand is made by qualitative methods, timeseries methods and/or causal methods:
Qualitative relies on judgement of experts to translate to quantities; Time-series statistically interpolate demand on historical data; Causal method seek co-relation on cause and effect basis between two (or more) variables to quantify demand; However, all forecasting methods are limited by:
Handling of un-quantifiable factors e.g. national pride Unrealistic assumptions fuelled by a desire to succeed Excessive data required (often unobtainable) to make accurate forecasts Uncertainty with environmental changes: Technology, Govt. Policy, International alignments, New materials/sources, Climate etc. Sensitivity analysis & What if scenarios (trust instinct!); Planning for contingencies with defined cut-in milestones.
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Generic Strategy
Customer
Relationship
Competitive Advantage
1. Cost Leadership:
To continually work reducing the cost prices of products. Supplier Q-C-D has very high priority.
Company
2. Differentiation:
Bmarking Partnering
To constantly offer innovative and unique solutions. Supplier technology & quality has focus.
Competitor
Supplier
3. Customization:
To offer required services in the required manner is the focus. Speed and flexibility important.
Lean Management
STAR Hold
DOGS Divest
Lo
Lo Hi
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Lo
Say, plan to buy Equipment, recruit & train Employees, develop product etc
Decision Making = is the core of the planning process; a plan does not come into being unless a decision i.e. certain commitments of resources, managerial time and money are made and risks are taken. Caution: A Plan is not intentions and should not suffer from Analysis Paralysis. vikramthadeshvar@hotmail.com
Decision Making
Limitations: time, information and logic; Behaviour: Risk averseness and biases.
A key step in the process is to identify those limiting factors, road-blocks to each effective (right thing) alternative then finding a solution with least sacrifice of resources (thing right):
marginal analyses benefits with incremental inputs; cost-effectiveness assessment of benefits over costs. vikramthadeshvar@hotmail.com
Decision Makingctd.
Experience: good teacher and useful when routine/repeat situations arise under similar circumstances. Without due analysis of the conditions, mistakes tend to repeat or a poor fit results. Research & analysis: the approach is in at first understanding the problem (half the solution!), then finding relations between various factors which hinder or foster goal attainment. This is a structured, analytical approach quantitative or otherwise.
Experimentation: arguably, the best technique to use, particularly when either experience or rationale is lacking/limited. However is expensive and success/failures are magnified, results are subject to interpretational errors.
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Decision Makingctd.
Decision making takes place under varying degrees of uncertain conditions and risks. Techniques used to aid the process are:
Risk analysis: every decision is based on interactions amongst different factors/variables each of which have their own probabilities (towards success). Analysis of these probabilities yield a risk profile for each alternative path. In the absence of defined probabilities, estimates can be used. Decision trees: the outcome (measure pre-decided e.g. cost or time) of every step in the decision is charted and a course selected on the most favourable outcome. Very much like making a trip, navigating by using a road-map
(refer example in W & K, Management a global perspective/10th edn. Pg. 209)
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Decision Makingctd.
Flow Charts: as a process-guide to taking a decision and helps as a check-list of key variables, the sequence in which they fall and the interrelations. Key to making a choice or re-examining the path taken are also indicated as risk-reduction devices.
(refer example in W & K, Management a global perspective/10th edn. Figure 8-5)
Decision Support Systems: a wide variety of (proprietary) computer based programs are available for managers to use their time more effectively for decision making of semi-structured tasks by providing alternative evaluations. They focus on the process of decision making, taking data provide by the management information systems in enterprises.
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Principles of Management 4
Management Process: Organizing for results
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Nature of Organizing
The identification and classification of required activities; The grouping of those activities towards attaining their set objectives; The assignment of those groupings to a responsible manager, duly empowered; The provision for coordination among, within and across the groups in the organization. Clarify tasks & responsibilities, Remove obstacles, Furnish decision making & communication network vikramthadeshvar@hotmail.com Support attainment of enterprise objectives
(Porter,1985)
Inbound Logistics
Operations
Outbound Logistics
Service
Primary Activities The margin reflects the reward for the risks run by the company. All activities together need to generate value greater than the sum of its costs. vikramthadeshvar@hotmail.com
Inbound Logistics: relate to receiving, storing and disseminating inputs; Operations: associated with transformation of inputs into final product form; Outbound Logistics: relate to collecting, storing and physically distributing the products to buyers; Marketing & Sales: relate to advertising, Promotion, sales, distribution-channel selection & management and Pricing; Service: associated with enhancement or maintenance of product value over life; vikramthadeshvar@hotmail.com
Procurement: relates to the function of purchasing inputs used across the firms primary and support activities; Technology Development: relates to know-how, processes & procedures, technology embodied in the product design and delivery. Most activities have their own sub-set of technology; Human Resource Management: directed at recruiting, training, developing and compensating all personnel; Firm Infrastructure: associated with serving and supporting the firm as a whole, with the company as its customer eg. Finance & accounting, Quality; vikramthadeshvar@hotmail.com
Most practicing mangers would translate this value chain to imply an organization as:
a formalized, intentional structure of roles and positions
Thus formal organization implies the intentional structure of roles in an enterprise. However, in an enterprise informal organization will form, not necessarily bad and is:
a network of personal and social relations not established or required by formal organizations but arising spontaneously as people associate with each other.
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# #
#
# Office Bridge Team
Span of control
$ Car pool
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Grouping activities & people into departments makes it conceptually possible to expand organizations to an infinite degree. Different patterns have been successfully used to group activities:
By simple nos. is a simple method works well for the lowest levels where work is routine, uniform and nonspecialized; time-grouping is an extension of this method where shift-working is required; By enterprise functions embodies what enterprises typically do e.g. Production, Engineering, Sales etc. This method, defined by F.W.Taylor, is arguably the most prevalent method still used.
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Departmentation ctd.
By territory or geography is very common when the geographical spread is wide. It was a device introduced to speed up management in similar units for easy and swift communication e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc. By Customer/Account orientation reflecting the primary interest in nature of markets/business/customer e.g. Banks: Institutional banking, Small Savings etc. By Process groups encountered primarily in specialized/ manufacturing operations where processes are vital e.g. Advertising: Copy-writing, Creative etc.; Manufacturing: Steel Melting, Wire-drawing etc. By Product Lines has evolved with enterprises becoming multi-line with function needing adaptation/integration to suit specific products e.g. Tata Motors: Passenger vikramthadeshvar@hotmail.com Vehicles / Commercial vehicles
Departmentation ctd.
By grid control in essence combining the functional and the product-line patterns to best effect. Functional excellence is not subjugated to Operational ease. In projects, this serves to bring together the diversity of skills required into one team. The Strategic Business Unit: companies today are organizing themselves as companies within a company to allow for maximum flexibility and freedom of operations, especially when the products/businesses are unconnected e.g. General Electric. Generally, SBUs have:
Their own Missions, Goals and Strategies; Distinct and definable set of competitors; Deploy and manage resources in key areas; A reasonable size. vikramthadeshvar@hotmail.com
Departmentation ctd.
Example of Grid Control & S.B.Us
C.E.O
Finance
Qual.
HRM
BU 1
BU 2
I.S.O
I.R.M Recr.
G/H.R Plant 1
G/H.R
Ind.
Sin.
T&D
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The purpose of organizing is to make human cooperation effective and is limited by:
the number of persons a manager can supervise effectively and efficiently; while the total number is dictated by the quantum of work/ nature of task/spread etc. Thus the two dimensions, Level (depth) and Span of control (width) are interrelated . The reason for creating Levels of organization is the limitation in the span of control. Effective span is influenced by:
Training/skill of subordinates and personal contact required; Clarity of delegation of authority; Clarity of plans, use of objective standards and communication techniques; Rate of change; Maturity and experience of the manager and organization.
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Span-of-Management ctd.
They are expensive as they increase, both infrastructure costs and staffing tends to increase; Real work is accomplished at the gemba (Japanese: workplace) where the actual value-addition/transformation takes place. The contribution of levels on top are not directly co- relatable, thus best avoided; Communication become complicated omissions, filterations and misinterpretations lead to wasted and misdirected effort; Planning and control become tortuous, requiring complicated coordination and alignment between levels.
Studies reveal that between 8 to 10 people at higher levels and upto 15 at lower levels is a good span. Increasingly, enterprises are attempting to cut back levels to 5 or less.
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